MergerMarket by Fay Sanders

| 05 July 2010

Teraco to receive USD 20m financing round to fund growth in sub-Saharan Africa and global JV possibilities, sources say

Teraco, the South African telecoms service provider, is about to receive USD 20m in financing, sources close to the matter said.

Existing investor Marlow Capital will be leading the financing round, alongside other investors and debt providers. The deal is likely to close late July or early August, said a source.

The extra USD 20m will be used to help Teraco build up its presence in South Africa. The company, which already has data centres in Cape Town and Johannesburg, is aiming to use the financing to build another centre in Cape Town and one in Durban.

Teraco provides power, security and storage to its corporate and banking clients wishing to outsource their data management. A further round of funding is likely to occur at the end of 2011. This financing will be deployed to further the company’s expansion into sub-Saharan Africa.

The company already has a joint venture to use the facilities of UK-based Telehouse, which has a similar business model to Teraco.

Teraco has been profitable since the end of June. Marlow led a USD 6m financing round in July 2008 to acquire a minority stake in the group.